LatinFinance - November/December 2016 - 35

BANKING
INNOVATION
PAYMENTS

Swift, the global financial messenger, is hoping to inject a
much-demanded dose of transparency into the cross-border
payments system. By Katie Llanos-Small

Gaining clarity

lobal financial cooperative Swift
is advancing a new system to streamline
communications and messaging related to
cross-border settlements. Its global payments initiative (GPI) is set to launch in
January and already has Banco do Brasil,
Itaú-Unibanco and Banco de Crédito del
Perú signed up. The largest lenders in
Mexico, Colombia, Chile, Peru and Argentina have also been invited to join.
The new system, which the Swift team
colloquially dubs "correspondent banking
3.0", will allow funds being transferred
internationally to arrive and be applied on
the same day, with information on the states
of the payment available to both parties in
real time.
The impetus for GPI came from improving technology in use in everyday life, as
well as a bid for efficiency and transparency.
"I can even track a pizza now," says Stacy
Rosenthal, regional solutions manager at
Swift. "Why isn't it as easy to track a payment as it is a package?"
LatinFinance spoke to Jairo Namur,
Swift's manager for Latin America and
the Caribbean, and Rosenthal about the
changes. Here are some highlights from the
conversation.
LF: What are some of the specifics of
the global payments initiative to Latin
America?
JN: The challenge in general with the
corporate market is that when you send
vendor payments and you disburse globally, if you don't have the visibility and the
transparency around fees you end up with a
whole bunch of manual processes to be able
to substitute for that.
Otherwise you don't know, with the exchange rate and all the fees along the chain,

you don't know if you adequately covered
that invoice and you may have some differences.... Corporates have to track after
the fact and put in place mechanisms with
providers to net that out. It's not the most
efficient way of doing things.
SR: I think the heightened awareness
for Latin America are the increased costs
around regulation. The transparency component is probably the number one priority. That tracking and tracing of a payment is
a big issue and it causes a customer service
problem.... It's hard to recoup a client when
something terrible goes wrong.
LF: So this is "correspondent banking
3.0". What's "correspondent banking
4.0" going to be?

JAIRO NAMUR, SWIFT

"WHEN YOU'RE
MOVING FUNDS ALL
OVER THE WORLD AND
YOU HAVE BALANCES
IN DIFFERENT
LOCATIONS, THE
ABILITY TO
CONSOLIDATE ALL
THAT INFORMATION
AND REPORT IT IN THE
RIGHT WAY IS A
CHALLENGE"

JN: Once we have this up and running,
the thinking is what do we do beyond the
corporates. So you want to test this, to get
some critical mass, to prove that it works.
And then we'll see the next phase.
SR: We already have feedback from the
community to include some of the intraday liquidity service levels that are also in
response to regulatory need to have transparency in liquidity and to provide support
for organizations that are now trying to have
better working capital management. That's
one area that banks are asking us to look
into.
JN: One of the challenges around liquidity, and being able to report what your liquidity position is, is actually knowing where
things are at certain times. The Payments
tracker goes a long way towards being able
to provide that visibility. When you're moving funds all over the world and you have
balances in different locations, the ability to
consolidate all that information and report it
in the right way is a challenge.
LF: How can you be certain that Swift
won't be vulnerable to hacking attack?
JN: The challenge with cyber security is
that we have to get it right every time, and
whoever is trying to hack us only needs to
get it right once. So we live with that thinking. We have to be cognizant of the fact that
cybersecurity is a big challenge. It's not
going to go away.
We can say that our network has never
been compromised. Our network is secure.
We have recently launched a customer
security program. We have to make sure the
edge - the participants in our local banks
- are also doing the best they can to make
sure their own systems are not being compromised. LF
November/December 2016 - L ATINFINA NCE.COM 35

http://www.LATINFINANCE.COM

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